Change in Equity Report

[JoeJansen]

Hi again!

As indicated in my previous postings, we are transitioning from Quickbooks to PC+ 9.0 for our accounting. My question this time involves the designated funds account.

The secretary has been entering contributions for the last 3 Sundays, which has included some donations to the designated funds account (02). When I run a "Changes in Equity" report, the donations all appear to be on the report correctly. Starting balance of 0.00, Income is correct, and ending balance matches the income.

Obviously we are not starting the year with a 0 balance in all of these accounts. Therefore, last night I tried to create a starting balance in one of the designated fund accounts. I did this by using the fund accounting - enter transaction. I debited the bank account, and credited the income account for the first one on the list. I posted this transaction, and went to see how it turned out.

This transaction does not appear on the Changes in Equity report. It does appear in the Selected Transactions report, along with all the contributions.

What do I need to do to get the starting balances entered for the year, and get it to reflect in the equity report? We have a council meeting tonight, and I was hoping to be able to show off the balances using the new reporting system. Any help is, of course, greatly appreciated!

--Joe Jansen

[Randy B]

If you question is to how to adjust the beginning balance on January 1, I believe what you are going to have to do is debit the cash account of where you want the cash and credit the cash account of where you are moving the cash from. You are not changing the total amount of cash of the church but only changing the amount per fund. You would also have to do the same with equity. You would debit the equity from where you are moving the cash from and credit equity of the fund where you are moving the cash to.

First, though you may want to undo the tranaction you posted.

[JoeJansen]

I am confused, then, becuase when contributions are posted, they post to the Income account. These are all Donor Restricted accounts, so they are set up with the complement of Income, Release, and Equity account. Whenever we post contributions from the Contributions Module, and then post that transaction from Fund accounting, it goes properly. Since the contribution module is pointed at the Income account, why would the Fund Accounting transaction be different?

Also, I actually DO need the bank account balance to increase when I do this, since I plan on using these initial balance adjustments to bring the bank account balance up as well, thus providing me with a way to double check that everything has been done properly. When the account balances all match what Quickbooks shows, and the bank account also matches, then I know I did everything properly.

Maybe as a side question, why does posting from Contributions to the Income account work, and reflect in the Change in Equity report, but a Fund Accounting transaction to the Income account not appear in the Change in Equity?

Thanks!!

--Joe Jansen

[Jeff]

The changes in equity report shows each equity account and lists the amount of income, expenses, transfers that effect that particular equity account. The transaction you listed debiting the bank and crediting the income should increase the income column for the equity account the income account is set to close to. This would not be the correct way to get the beginning balance into the proper equity account. To get the correct beginning balance into a donor restricted equity account you would debit the unrestricted equity account and credit the donor restricted equity account. After doing this, when you look at the changes in equity report you will see a new column called direct changes. This column shows amounts that directly effected the equity account. The reason this will show there is because the balance was put in with a journal entry.

If this doesn't make sense let me know.

[JoeJansen]

The changes in equity report shows each equity account and lists the amount of income, expenses, transfers that effect that particular equity account. The transaction you listed debiting the bank and crediting the income should increase the income column for the equity account the income account is set to close to.

So does that mean that it wont reflect until I close the month? That would make sense, then, since I haven't closed January yet (obviously)

This would not be the correct way to get the beginning balance into the proper equity account. To get the correct beginning balance into a donor restricted equity account you would debit the unrestricted equity account and credit the donor restricted equity account.
If this doesn't make sense let me know.

This means that I have to first credit the unrestricted equity account. Since we are migrating from quickbooks to PC+, I am starting with an empty accounting package, but not an empty bank account.

Would I do this as a 4-line entry, then? debit the bank account, credit the unrestricted equity account, debit the unrestricted equity, and credit the restricted income?

Thanks!

--Joe Jansen

[Jeff]

So does that mean that it wont reflect until I close the month?

Not really, the report will change as soon as you post the transactions not after closing the month. The closing the month process in version 9 doesn't really do any processing on the data.

Did you walk thru the accounting setup assistant? If you put all your beginning balances in while going thru it, it would have created all the begining journal entries for you.

If you are putting the begining balance in yourself, are you planning on making lump sum entries for the year to date amounts for income & expense accounts?

[JoeJansen]

I used the setup assistant for the general fund (Fund 01) which contains all of our budgeted items. Since the Designated Funds (02) uses a seperate checking account, I did that one seperately. IIRC, the assistant only sets up fund 01 (although I could be very wrong).

Income and expenses are current through December 2004 in Quickbooks. Income has been occuring through the contributions module for some of the designated funds, and that is working flawlessly. I have held back on entering any of the expenses until I get the balances caught up. There will be a lump sum entry for the income on each of the sub-accounts, but not on the expense, since I will be starting the expenses as of Jan '05, and any expenses from that point on will come from the accounts payable module. The lump sum income will be the ending balance as reported by Quickbooks.

Should I do this as a 4 line transaction like in my last post? Or is there a better way to get the starting balances in there?



Thanks for the assistance!

--Joe Jansen

[Jeff]

I think I understand better what you are trying to do now. The accounting setup assistant does only setup one fund. A couple more questions to make sure I have a grasp what exactly you will need to do. The balance in the checking account for fund 1 right now does it include these designated balances? The year to date income you refered to, is this income for 2005 or was this the balance as of the end of 2004?

[JoeJansen]

I think I understand better what you are trying to do now. The accounting setup assistant does only setup one fund. A couple more questions to make sure I have a grasp what exactly you will need to do. The balance in the checking account for fund 1 right now does it include these designated balances?

No. Fund 1 is the general, budget fund only. This is where tithes, etc. goes. Fund 2 is exclusively designated. The checking account for fund 1 is # 1110, and fund 2 is 1120 to keep them seperate.

The year to date income you refered to, is this income for 2005 or was this the balance as of the end of 2004?

The balance at the end of 2004. Deposits to Fund 02 (02-1120) are being made through the contribution module, but I need to add the balance from the end of 2004, as reflected in the closing amount from Quickbooks.

Thanks!!

--Joe Jansen

[Jeff]

Since this is the balance at the beginning of 2005 the following journal entry should get your beginning balance for your checking account and the correct equity accounts:

If you have not put the beginning balance for your 02-1120 checking account you would:
DB 02 bank account for the beginning balance as of 2005.
CR each restricted equity for its beginning balance for 2005.

This should balance the entry and get the correct beginning balances in the equity accounts.

If you already have the beginning balance bank account account, what account did you offset when you created the journal entry?

[JoeJansen]

Since this is the balance at the beginning of 2005 the following journal entry should get your beginning balance for your checking account and the correct equity accounts:

If you have not put the beginning balance for your 02-1120 checking account you would:
DB 02 bank account for the beginning balance as of 2005.
CR each restricted equity for its beginning balance for 2005.

This should balance the entry and get the correct beginning balances in the equity accounts.

If you already have the beginning balance bank account account, what account did you offset when you created the journal entry?

So rather than credit the income account, I credit the equity account directly?

I don't have a starting balance entered for 02-1120, so that is not a problem!

Thanks for the help!

--Joe Jansen

[Jeff]

So rather than credit the income account, I credit the equity account directly

Yes the left over amount from the previous year is shown in the equity account. To see the "balance" of this donor resticted account at any time you would look at the equity account for donor restiction.

Here is kind of how it works:
When money comes in for a donor restriction, the income account for the donor restriction is credited which in turn increases the equity account for that donor restriction.

When you get ready to spend money for the donor restriction, you do the release transaction. This transaction debits the release account for this donor restriction which then decreases the balance for the equity account for that donor restriction. The release transaction "releases" money from its restriction so it can be spent. It is what tells the system how much restricted money is to be used.

Since this money came in last year we are going to credit the equity account directly because we don't want to show this money as this year's income and the equity account is where the balance is for this donor restriction.